In taking over Crane bank on January 27, 2017, Dfcu bank perhaps pulled off the second largest bank acquisition in Uganda since Standard bank of South Africa bought Uganda Commercial Bank (UCB), now Stanbic bank, in 2000.

But as DERRICK KIYONGA reports, the historic acquisition has brought lots of attention and baggage to the bank.

Now, Dfcu is being sued over loan transactions done by Crane bank. In a suit filed on February 27, 2017, Captain Joseph Charles Roy argues that he owns Conrad House Limited, plot 30 on Jinja road, which he paid for in installments worth $15m with loans from Crane bank, which was previously owned by businessman Sudhir Ruparelia before it was taken over by Dfcu in January.

Conrad Plaza along Entebbe road

Captain Roy argues that he has repaid over $19m over the years but surprisingly the money is not reflected on the accounts of either Crane bank or Dfcu, which, according to him, smacks of fraud.

Through Omongole and Company Advocates, Roy says he has been out of the country for about five years during which time no bank statement or loan statement were sent to him. At least ten years ago, Capt Roy was regarded as one of the richest Ugandans with interests in air transport and real estate, among other sectors.

But that was before his empire started crumbling under the weight of bank loans. According to Roy, his ranch which had rhinos located in Migyera, Nakasongola district, was sold off in 2009 at about $12m and the money was deposited in Crane bank, now Dfcu, in a bid to offset the loan facility but there is no evidence to show the money went to the settlement of the said loan.

Roy further states that his properties were sold and the proceeds held by Crane bank, but the same are neither reflected on the bank's accounts or loan statements.

According to court documents, these properties include; Conrad Plaza on plot 22 Entebbe road, which was sold at $6m; plot 22 on Kampala road, which was swapped at Shs 860m; and his shares in Das/Rokabond, which were sold and all the proceeds held by Crane bank on the loan account.

Roy adds that $8.9m was paid to Crane bank from his shares in Rwenzori Commodities. Armarali Karmali (AK), his company, paid $2.4m from Barclays bank to Crane bank, and Mukwano Industries paid $400,000 from his shares, all to clear the loan but all are not reflected.

Roy ran to court after he learnt Dfcu was in the process of selling off Conrad House on plot 30 Jinja road, in order to offset the said loan.

"The plaintiff [Roy] was informed of the sale [of Conrad House] by the executive director of the defendant [Dfcu] and statutory manager of Crane bank in various meetings between 20 and 23 February 2017, in which he was asked to officially bring the above matters to the attention of the defendant…," the suit reads in part.

Roy insists that he is not indebted to the bank, having had all the mentioned properties sold and the proceeds channeled towards settling the loan.

"The plaintiff also contends that the interest rate charged on the loan at 36 percent, plus 27 percent as penal interest, is very high and excessive and was not the rate agreed to in the loan agreement, and amounts to unfair enrichment," the plaint goes on.

Efforts to reach dfcu's legal officer, Agnes Isharaza Tibayeita, proved futile as she wasn't taking our phone calls. On January 27, 2017, Bank of Uganda confirmed that assets and liabilities of Crane bank, which had been put into receivership, had been transferred to Dfcu.

Before that, Bank of Uganda had taken management control of Crane bank because it lacked sufficient capital and posed a systemic risk to the financial system. According to Bank of Uganda, external auditors found Crane bank's liabilities exceeded assets, rendering it insolvent.

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Gwokto La'Kitgum

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